UPDATED 11:41 EDT / OCTOBER 12 2015

NEWS

Syncsort sells out to private equity fund

It’s shaping up to be a historic week for enterprise technology. Against the backdrop of Dell Inc. confirming its long-rumored plans to acquire EMC Corp. in one of the biggest mergers that the industry has ever seen, another veteran name in the business is closing a chapter of its own.

Syncsort Inc. is selling out to Clearlake Capital Group, L.P for an undisclosed sum after nearly half a century in operation. The New Jersey-based data transfer specialist started its life in the late 1960s as a provider of record organization software for mainframes and recently changed focus to helping customers move those records off their big iron installations.

That strategic turn came in response to the hit that its core sorting business started take from the accelerating shift towards modern data management systems that can perform many of the tasks traditionally assigned to System z machines for a fraction of the cost. Recognizing that there’s no stopping the tide, Syncsort decided to embrace it full on and address the logistical challenges that make it difficult to extract data from mainframes.

Its flagship DMX software provides a straightforward interface for finding and migrating files in big iron deployments to a wide range of newer systems, including most of the leading relational databases and data warehouses. The last two years have seen that integration extended to Hadoop, Splunk Inc.’s namesake log processing software and most recently the speedy Spark in-memory analytics engine.

Much of Clearlake Capital Group’s buyout activity focuses on turnarounds, restructurings and so-called “special situation transactions,” the official jargon for firms on unstable financial ground. However, officials from both companies said that isn’t the case with this deal.

Syncsort is an “excellent buy and build platform to lead consolidation in the industry, which is central to Clearlake’s investment strategy in the software sector,” said Behdad Eghbali, Managing Partner of Clearlake, in a prepared statement.

Syncsort CEO Lonne Jaffe said Syncsort’s business is in excellent shape. “Our top line is growing and our profits are growing even faster,” he said in an interview. Jaffe said about one-third of the company’s revenue currently comes from mainframe products and that Syncsort’s reliance upon helping customers save money by moving to low-cost platforms like Hadoop protects it from some of the winds that are buffeting traditional mainframe software vendors.

Mainframe software is typically been priced by the MIPS (millions of instructions per second), meaning that as customers reduce mainframe capacity, license fees fall as well. Jaffe said that, in contrast, Syncsort makes money when customers reduce their mainframe capacity by using its migration tools. “We don’t have anything the mainframe that isn’t about saving the customer money,” he said. He added that Clearlake intends to retain Syncsort’s current management team.

Clearlake Capital Group is assigning three of its top executives to the company’s board in order to oversee the transition, including co-founder Behdad Eghbali. Merrill Lynch & and Co Inc., Evercore Partners Inc. and Pillar Capital Advisors LLC are executing the transaction.

An earlier version of this story contained speculation about Syncsort that was not presented to the company for response. This revision incorporates that response. 

Image via DasWortgewand

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